Money Can Buy Happiness to a Certain Extent

The topic has arisen on various accounts, about whether or not money can buy happiness. In many cases, the old phrase “Money can’t buy happiness” holds true. It is a common saying implying that money is associated with corrupt and immoral things, such as materialistic goods and worldly items. If people were asked this question, most would automatically reply, “No,” in order to avoid ridicule or dispute. Through diligent research and careful studies the behaviors of people in various social and economic classes reveal the relationship between wealth and happiness. Despite common misconceptions and surface level thinking, it is found that money is necessary for happiness. However, research finds that varying degrees of happiness are dependent on how they are measured and how the money is expended.

Before launching into the relevance of money and happiness, happiness will be defined as one’s subjective well-being. In determining the relationship between happiness and money, researchers have utilized two distinct measuring processes, life evaluation and emotional well-being. "Life evaluation requires a long view of a person’s overall life and accomplishments. If they’ve accomplished the goals they’ve set, are financially secure, and are emotionally fulfilled, they are more likely to have a high evaluation of their life.” Emotional wellbeing “reflects a much shorter view and refers to the emotional quality of an individual’s experience”, such as joy, affection, and tranquility, as opposed to negative experiences.

According to Maslow’s hierarchy, people need basic essentials before achieving greater levels of achievement, self-satisfaction, knowledge, and happiness. By the nature of our society, it is necessary to gain a certain amount of money to acquire food, water, shelter, and other necessities of life. Once these needs are met, individuals are essentially free to spend. How much money is required to meet these needs varies from person to person, but experts have found an almost universal amount. One research study found that the magic number for happiness is earning a minimum of $75,000 per year. “People with an annual household income of more than $75,000 don't have commensurately higher levels of emotional wellbeing, even though their life evaluation rating continues to increase.” According to the study, the essential needs have been met at that point, so life can be easier. In other words, a person may possess a little extra “cushion” for unexpected health issues, accidents, or family problems. By having this cushion, a person may relieve oneself from the constant stress and overwhelming complications of everyday life and feel more at ease or happy.

In the Wall Street Journal report, entitled “Can Money Buy Happiness”, the author Andrew Blackman references a study performed by Daniel Sacks, Betsey Stevenson and Justin Wolfers. The study illustrates a definitive correlation between one’s income, happiness, and satisfaction. Panels of individuals were set up based on levels of income and all panels were asked the same questions relating to their overall happiness. Overwhelmingly, the evaluative study demonstrated a significant increase in overall happiness relative to higher incomes. In fact, 100% of individuals who made more than $500,000 per year stated they were very happy as opposed to only 35% of the individuals who made less than $10,000 per year. Clearly, from an evaluative standpoint, individuals who make more money feel happier about their overall life and accomplishments. The same researchers also showed a direct connection with life satisfaction, another component of happiness, and income. Again, 100% of those individuals who made more than $500,000 per year were very satisfied as opposed to only 24% of the individuals making less than $10,000 per year.

It is clear from the findings above that a higher income made people happier. However, from an emotional well-being standpoint, does it matter how the money was spent? The answer to this was found in an affective research study performed by Van Boven and Thomas Gilovich in the Journal of Consumer Psychology. In this study, individuals were asked how they felt before and after spending their money on material things versus experiential purchases. Experiential purchases are those “made with the primary intention of acquiring a life experience” while defining material purchases as those “made with the primary intention of acquiring a material good: a tangible object that is kept in one’s possession.” The study concluded that the experiential purchases brought more emotional and longer lasting happiness than the material purchases. Therefore, happiness is not only dependent on having enough income to spend, but how one spends it. Experts agree that experiential purchases allow one to have positive interactions with others, including complete strangers. Human interaction is very important in one’s overall happiness. Fortunately, money provides the tool for one to pay for these experiences.

Elizabeth Dunn, a social psychologist of the University of British Columbia, found that those who donated money were happier than those who did not. She repeated series of experiments, in which students were given either a five dollar bill or a twenty dollar bill in the beginning of the day. At the end of the day, she queried the students about how happy they were feeling, as well as their purchases. She discovered that individuals who engaged in giving donations “were measurably happier than those who spent it on themselves”. As demonstrated, the act of giving improves one’s emotional well being, which is a vital component and measure of one’s overall happiness. Coupled with the previous studies, it can be concluded that individuals with higher incomes who spend their money wisely will be happier than those that earn less and spend their money poorly.

In conclusion, money can buy happiness. As stated by Elizabeth Dunn, Daniel Gilbert, and Timothy Wilson, “If it doesn’t make you happy then you are probably not spending it right." To elucidate, money can bring you happiness if you share it with people who know its true value and sincerely need it. In actuality, the answer is not as clear-cut as some may presume. Money can indeed buy happiness and provide the means to make life easier but only if it is used for the right intentions. In the end, money does not create happiness; everyone has to make their own happiness by how they choose to live their life. It is up to each and every person to make his or her own happiness, and it does not necessarily have to involve money. If some people cannot be content with what they have, they will never lead a rich life, no matter how much money they earn.